SoftBank, the world's largest technology investment firm, has bought a fifth of India's most valuable startup -Flipkart -for a mammoth $2.5 billion, in a deal that marks the biggest private investment in the country's consumer technology sector. The Japanese investor -best known for backing China's Alibaba -is now the biggest investor in India's largest online retail company that is battling US' Amazon in one of the world's most competitive markets for ecommerce.
The investment -from SoftBank's $100-billion Vision Fund -is a mix of direct funding to the ecommerce company that is termed as primary investment, and also the purchase of shares from existing shareholders that is described as secondary investment. The deal will provide a partial exit to Tiger Global, the New York-based investment firm, which until now was the largest and most influential investor in Flipkart.
Tiger Global will own about 18% stake in the company now while South African media giant Naspers along with Chinese Internet conglomerate Tencent will hold another 20% stake.
This secondary transaction, which is estimated to have valued the company at $7-8 billion, will also provide partial exits to the two cofounders, employees as well as Flipkart's first investor -venture fund Accel Partners.
This deal will take SoftBank's total investment in India to over $6 billion. It recently pumped in $1.4 billion in digital payments and commerce firm Paytm at a valuation of over $7 billion and is the biggest shareholder in India's largest ride hailing application Ola.
With this investment, Flipkart's cash reserves cross $4 billion, allowing the Bengaluru-headquartered online retail giant to create a deeper moat, as it prepares to stave off stiff competition from Jeff Bezos' Amazon. The American company has pulled out all stops to grab pole position in India's discount-fuelled, highly-attritional ecommerce industry.
The investment -from SoftBank's $100-billion Vision Fund -is a mix of direct funding to the ecommerce company that is termed as primary investment, and also the purchase of shares from existing shareholders that is described as secondary investment. The deal will provide a partial exit to Tiger Global, the New York-based investment firm, which until now was the largest and most influential investor in Flipkart.
Tiger Global will own about 18% stake in the company now while South African media giant Naspers along with Chinese Internet conglomerate Tencent will hold another 20% stake.
This secondary transaction, which is estimated to have valued the company at $7-8 billion, will also provide partial exits to the two cofounders, employees as well as Flipkart's first investor -venture fund Accel Partners.
This deal will take SoftBank's total investment in India to over $6 billion. It recently pumped in $1.4 billion in digital payments and commerce firm Paytm at a valuation of over $7 billion and is the biggest shareholder in India's largest ride hailing application Ola.
With this investment, Flipkart's cash reserves cross $4 billion, allowing the Bengaluru-headquartered online retail giant to create a deeper moat, as it prepares to stave off stiff competition from Jeff Bezos' Amazon. The American company has pulled out all stops to grab pole position in India's discount-fuelled, highly-attritional ecommerce industry.
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